Independent director network, agency costs and stock price crash risk

Xiao-Li Gong, Yi-Wei Li, Jin-Yan Lu and Yong-Kang Feng

Economic Research-Ekonomska Istraživanja, 2023, vol. 36, issue 2, 2177697

Abstract: It is of great significance to improve the corporate governance structure to study whether independent directors play the role of ‘vase’ in the governance of listed companies. Based on the social network theory, this article constructs the social network formed by interlocking independent directors and examines the influence of independent director network on stock price crash risk. The mechanism test analyses the mediating effect of principal–agent problem and large shareholder’s tunnelling on stock price crash risk. The empirical research shows that the higher the network centrality of the company’s independent directors, the lower the stock price crash risk. The independent director network can restrain the company’s stock price crash risk by reducing two types of agency costs. Further research finds that the influence of independent director network on stock price crash risk is more pronounced in companies with unreasonable ownership structure, poor internal governance and weak external supervision. The research conclusions have important implications for listed companies to reduce the risk of stock price crash and maintain the stability of the capital market.

Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/1331677X.2023.2177697 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:reroxx:v:36:y:2023:i:2:p:2177697

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/rero20

DOI: 10.1080/1331677X.2023.2177697

Access Statistics for this article

Economic Research-Ekonomska Istraživanja is currently edited by Marinko Skare

More articles in Economic Research-Ekonomska Istraživanja from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().